October 2016

Best Money Moves for a Happy Life

Author: Kent Thune

Most people get the perspective on money and happiness backward. They make the mistake of believing that more money translates into more happiness. We’ve all been in a similar, challenging position at some point in life and have said or thought things like: If only I won the lottery, I could quit this job, pay off all of my debt, buy a big house, drive a new car, wear beautiful clothes, eat at the best restaurants, and go anywhere in the world for vacation.

If your hopes, dreams and plans of having more money are more realistic—ones that can be obtained by conventional means, such as a pay raise or career advancement—they may be months or years ahead of you, if not further away. But there’s no need to wait for more money to be happy, because happiness does not require money (or at least not much of it). What is most important about obtaining and maintaining the proper and healthiest perspective on money and happiness is to understand and maintain one simple philosophy: Life is not about making money; money is about making a life. It’s not the money that makes you happy; it’s what the money can do for you.

Yes, if you were handed a briefcase stuffed with one-hundred dollar bills, you’d likely feel a powerful but brief surge of euphoria. But it’s crucial, both in financial matters and in life in general, that you understand the difference between pleasure and happiness. The prior is fleeting and elusive (and often expensive); the latter is enduring, attainable and affordable (or even free of monetary expense). In different words, more money may provide short-term pleasure, but it doesn’t help much with long-term happiness.

Therefore, the first best money move you can make for a happy life is to maintain the perspective that money isn’t everything. Even the most successful entrepreneurs in history didn’t see money as a primary motivation; they set out to accomplish something that was meaningful to them; they were able to find a way to get paid to do something they love.

So success in finance and in life is more about you than it is about money. As the famous psychologist and philosopher Abraham Maslow found in his studies of happy people, the highest need for human beings is to be self-actualized, which means that you need to be yourself if you are going to be happy.

Find work that is meaningful
This brings us to our next best money move for a happy life: finding work that is meaningful to you. An interesting article in BusinessWeek, “How Adults Achieve Happiness,” makes some simple points and provides useful advice based upon observations found in a survey conducted by Marshall and Kelly Goldsmith. In the survey, the Goldsmiths primarily focused on how happiness at work and at home is correlated. They found that there is an incredibly high correlation between people’s happiness and meaning at work and at home. Results of the survey showed that the number of hours worked had no significant correlation with happiness or meaning experienced at work or at home. If you love what you do, work doesn’t feel like work. It’s more like play.

Those who were more satisfied with life outside of work were the respondents who reported spending more time on activities that produced both happiness and meaning. So even if you don’t absolutely love your job, be sure to engage in meaningful activities when you are home. This means leave work at work. It also means don’t just come home, eat dinner, watch TV and go to bed. Do something you love with your free time.

Perhaps the most important takeaway from the survey is that those who are miserable on the job are usually miserable at home. This may seem like common sense, but there are countless cases of people working in jobs they dislike or hate because they are working for money, not meaning.

Since work and home are very different environments, our experience of happiness and meaning in life appears to have more to do with who we are than where we are. Whether are not we can be happy is highly dependent on whether or not we are able to be and act as our authentic selves. Think of a time you’ve been unhappy with anything in life, especially in work, social environments and personal relationships. If you think deeply enough, you will realize that the core reason you weren’t happy in any of those situations is because you were not able to be yourself or because someone didn’t understand you or appreciate you. When you can’t be authentic, you’ll find it difficult, if not impossible, to be happy.

Pay yourself first
The next best money move for a happy life is to pay yourself first, which, in the financial planning industry, has its own acronym—PYF. When you PYF, you’re making yourself the priority—ahead of the rent or mortgage and the utilities. PYF doesn’t mean spend money on things for you; it means put a certain amount of money into an account where it won’t easily get sucked away by unconscious spending. For example, many employers offer a retirement benefit, such as a 401(k) plan, which is a perfect example of PYF, because a certain amount of money is set aside, out of your reach and out of the reach of bill collectors, every pay period.

But what if you don’t have the money to PYF? If you don’t, you’re in the same category of two-thirds of Americans who live paycheck to paycheck. But this ongoing financial struggle isn’t necessary in many instances.

Spend less than you make
This brings us to our third and final money move for a happy life: Spend less than you make. Like the other money moves for a happy life, this seems incredibly simple and commonsensical, yet it’s difficult for a majority of Americans to achieve.

To spend less than you make, you’ll need a healthy balance of awareness and learning how to be satisfied with less material things. Begin by paying attention to where your money is going. You can do this by tracking your spending for at least one month. Write down every single purchase, even if it’s something as simple as your favorite latte or something from the snack machine at work. At the end of the month, look back at the list of purchases and categorize them as either a want or a need.

Wants, such as sugary snacks and cable TV, are things you don’t need to survive. Needs include food, shelter, and (some) clothing. Look at the items listed as wants and try to reduce or eliminate as many of them as possible from your spending. Chances are you’ll find as much as $100 or more per month spent on things you can easily live without. And when you get a raise at work, put most of it away into your PYF items, such as retirement, an emergency fund, or debt reduction.

The best money moves for a happy life are not as much about money as they are about perspective, self-awareness, authenticity, and behavior. As the nineteenth century philosopher Friedrich Nietzsche said, “He who has a Why to live for can bear almost any How.” To be happy in life, meaning must come before money.

Kent Thune teaches entrepreneurship and finance at Hilton Head Island High School. He also owns an investment advisory firm, Atlantic Capital Investments, and is a freelance writer. You can follow his musings on mind, money and mastery of life at TheFinancialPhilosopher.com or follow him on Twitter @ThinkersQuill.

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